Report of the National Seniors Council on Low Income Among Seniors

Annex D: Overview of the Retirement Income System

Canada’s Retirement Income System (RIS) is intended to fulfill two different but related objectives: to reduce the incidence of low income in old age; and to enable seniors to maintain a reasonable living standard in retirement. The system is comprised of three separate but related tiers designed to work together.

The first tier is made up of the Old Age Security (OAS) program, a non-contributory, residence-based program which provides a basic pension to virtually all seniors, and the Guaranteed Income Supplement (GIS) to seniors who have little or no income other than the OAS. The Allowance and the Allowance for Survivors also provide benefits to low-income persons aged 60 to 64 who are spouses or common-law partners of GIS recipients or survivors.

The second tier of the system is the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP). The CPP is a jointly managed federal-provincial plan that is financed through contributions from employees, employers, the self-employed, and from investment income. The QPP applies in Quebec. Almost everyone who participates in the paid labour force in Canada contributes to the CPP or QPP and will benefit from their retirement and other provisions.

The third tier of the retirement income system consists of private retirement savings. This includes both private workplace pension plans, known as Registered Pension Plans (RPPs), Registered Retirement Savings Plans, private investments and other income or assets.

Canada’s Retirement Income System
Resource  Number of Beneficiaries/ Contributors  Maximum Monthly Benefit  Total Amount Paid 
PILLAR 1
Public Non-Contributory
Old Age Security (1952) 4.5 million (2008 monthly average) $516.96 (October-December 2008) $26 billion (2008)
Guaranteed Income Supplement (1967) 1.6 million (2008 monthly average) $652.51 (single person) (October-December 2008) $7.5 billion (2008)
PILLAR 2
Public Contributory
Canada Pension Plan (1966) - 12.2 million contributors (2006) - 3.5 million retirement beneficiaries (2008 monthly average) $884.58 (2008 maximum monthly retirement benefit) $21 billion (2008 retirement benefit)
Quebec Pension Plan (1966) - 3.7 million contributors (2006) - 1.3 million retirement beneficiaries (2008 monthly average) $884.58 (2008 maximum monthly retirement benefit) $6.1 billion (2008 retirement benefit)
PILLAR 3 Private Contributory Registered Pension Plans (RPPs) (workplace pensions) (1917) 5.7 million Canadians enrolled (2005)
Registered Retirement Savings Plans (RRSPs) (1957) 6.2 million contributors (2006) $2,730 (median contribution) (2006)
Other Assets and Income
  • Housing assets
  • Business assets
  • Earnings: median earnings of seniors in the labour force: $10,000 (Census 2001)
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